With the recent jump in gold prices, it is clear gold is ready to rally and test the $2,000 level soon. The author explains this price level of gold will be resisted by central banks but in the coming two years the flight to safety will become popular among investors.

Well, it is clear to us that gold is ready to rally and test $2000 and soon. It will likely be over the months leading into the US election.

Let me explain

Gold is due for a major rally because even though the general commodity complex is in the tank and will continue to be, the flight to safety trade is on again. Not to mention that the governments around the world are trying to inflate things.

Well forget that. Deflation will win the day, but all the world governments will be inflating like mad in the coming years. The coming two years. But now the flight to safety trade is on big time. Big time.

Gold settled in the $1600 range, and we predicted it would hover between $1500 and $2000 almost a year ago in 2012. We feel that gold will now start testing and keeping the $2000 level in 2013.

Clearly, this will be resisted by central banks. But this is our newest projection.

The turmoil in the Mid-East is clearly spiking both gold and oil, I more focus on the gold, but the fear premium is back.

In 2013, we expect gold to break into the $2000 plus realm. Now one big caveat here is if there is a stock crash, we expect gold to challenge $1350 at the bottom of that crash if that appears. The general commodities will suffer sans food. Regardless, things like steel copper, coal. Oil, no because of the fear premium.

We also expect the USD to rally here. That is, unless a new QE is announced. In that case the USD will be flat.